Market's evolution 26 of September to 30 of September 2016
Monday, 03 of October 2016
The end of September resulted with increases in volatility levels aimed by the doubts that the Deutsche Bank generated after the announcement that the German bank would be penalized with a fine, which would suppose 14.000 million of expense for the company. The reason can be found in the excessive risk levels accumulated associated with owning junk mortgages.
In Europe, markets moved downward following the sharp falls staged by the banking sector. Even some investors would have started talking about the possibility that the drop in confidence caused by the situation of the balance of Deutsche Bank, could eventually lead the region into a new financial crisis in Europe. However, the possibility that the Eurogroup or the German government bails out the bank has been ruled out. Nonetheless, the news that were announced on Friday reported the reduction of the fine to 5,400 million USD, a factor that swung upwards the market sentiment.
Regarding macroeconomic developments, it seems to keep improving in a context in which consumer prices rebounded above expectations (+0,4%). For markets, closures resulted in slight cuts; -1% in the German DAX (now close to 10.511 levels) and STOXX50 (trading around the 3.002).
As far as the US is concerned, we have been following closely the first face-to-face were the two leading candidates for the US elections (Donald Trump and Hillary Clinton). And, contrary to what was expected, the winner was the Democratic candidate.
On the other hand, we were awaiting for the statements made by the different members from the Fed in response to the date of the next normalization of types. However, the situation remained the same, we haven’t still observed consensus among the different members despite keeping unemployment levels at minimum levels while levels of growth had been beating expectations (at +1,4% over the expected figure +1,3 %).
The markets closed flat, maintaining the levels of S&P500 in the 2.168 and the Nasdaq Composite at 5.312 levels.
In Asia we could access the minutes released by the BOJ, where special importance was put on the weak inflation expectations although activity risks remained on the downside. In the same vein, it seems that confidence levels in small businesses begun to rebound (up to 47,7 from the previous figure of 46.3). While for China, forecasts of growth for 2016 remained positive at +6,7.
Corrections suffered by the main Japanese were again a reflection of the growing doubts about the effectiveness of monetary policies in the region. The weekly close was settled with cuts of -1,82% closing at 16.449 levels.
As far as for the currency is concerned, the major pairs remained within its fluctuation ranges without major surprises. The closures resulted flat, locating the EUR/USD around the 1.1238, while the EUR/GBP and EUR/JPY did around the 0,866 EUR/GBP and 113,9 EUR/JPY.
As for commodities, the main protagonist was again the Barrel of Brent. After disclosing that the OPEC members reached an agreement to freeze production levels to 32.5 million barrels per day (about 33,2 produced in August) and the statements of the Russian minister by being open to act jointly with OPEC, he led the commodity to rebound nearly +7%. However, despite the good news, it did not succeed in breaking the resistance located at 50 USD/Brent, finally closing at 49 USD/Brent.